LIMA, Peru -- Peru's government granted a three-year extension Monday to a U.S.-owned metallurgical plant to complete environmental upgrades in a smoke-choked, highly contaminated Andean town.

Energy and Mines Minister Glodomiro Sanchez told reporters that the St. Louis-based Doe Run Co. would have until 2009 to complete three sulfuric acid treatment plants to lower toxic emissions in La Oroya, 90 miles east of Lima.

The original deadline was the end of 2006 to reduce sulfur dioxide emissions.

Sanchez sad to qualify for the extension, the company will have 30 days to sign an "environmental trust" contract and post $28.6 million in escrow and meet strict emission targets. He said Doe Run will also have to provide permanent health care services to children and pregnant women in the town and carry out the cleanup of homes, streets and "critical areas" around the plant.

Eliana Ames, coordinator of a grass-roots organization in La Oroya, said, although her group opposed the extension, it was impressed with "the exhaustive, rigorous process and strictness" that the government applied to Doe Run -- in part a reaction to the outcry of the environmental activists.

"We believe it has created an interesting precedent for citizen involvement in monitoring the fulfillment of environmental commitments," she said.

La Oroya is a town of about 30,000 people, wedged into a narrow gorge 12,300 feet high in the thin air of the Andes.

Repeated studies by the company, Peru's government and most recently, the Saint Louis University School of Public Health, have detected elevated levels of lead, arsenic, cadmium and other toxic heavy metals in the residents of La Oroya, particularly its children.

Doe Run agreed to improve the facility, which processes copper, lead, zinc and smaller amounts of gold, silver and other metals, when it purchased the 82-year-old smelter in 1997 from state-owned Centromin, which ran the plant from 1974.

But in December 2004, the company threatened to close the plant, the town's main employer, if the government did not grant the extension. At the time, La Oroya residents blocked highways and clashed with police in protests supporting the company's demand.

Doe Run did not immediately comment on the ruling. The company said months ago that it wants to comply with the government's demands, but noted it will have to invest nearly $200 million for environmental projects, more than the $107 million it originally agreed to.

The company says it has invested more than $140 million to reduce lead emissions from the main stack by more than 28 percent since 1998, and has reduced worker blood lead levels by more than 34 percent since 1997.